Audit: Northern Beaches Hospital partnership "at risk of failure"

The Auditor‑General for New South Wales has released a report that has concluded that the Northern Beaches Hospital (NBH) public–private partnership is not effectively delivering the best-quality integrated health services and clinical outcomes to the Northern Beaches community and the state. This conclusion was based on the standard required under the arrangement and the key objective of the project deed.

The conclusion comes part of an audit that assessed how effectively and efficiently the NBH public–private partnership delivers public hospital services. Built in 2018 and operated by a private operator, Healthscope, in a public–private partnership with the NSW Government, NBH is a private hospital that also provides public hospital services — Healthscope being contracted to operate the public portion of the hospital until 2038.

“The partnership is at risk of failure, with Healthscope requesting in November 2023, and again in December 2023, that the return of the public portion of the Northern Beaches Hospital be brought forward by 14 years,” the Audit Office of New South Wales (AONSW) said in its report snapshot. “In its requests, Healthscope noted the risk to the viability of the Northern Beaches Hospital, citing insufficient funding, a lack of integration into the wider health network, and strained stakeholder relationships.”

The audit found that NSW Health effectively manages the contract with Healthscope day-to-day on behalf of the state, ensuring that public hospital activity at the Northern Beaches Hospital is provided at a lower cost than if the state operated the hospital. The audit also found that the public–private partnership structure creates tension between commercial imperatives and clinical outcomes.

“The Northern Beaches Hospital has recorded concerning results for some hospital-acquired complications and has not taken sufficient actions to address some identified clinical safety risks,” AONSW said. “The project deed, which governs the partnership, does not support the hospital’s integration into the local health district and broader health network. This has an impact on patient journeys and access to services for patients in the Northern Beaches.”

AONSW also notes that Healthscope has no commitment or obligation to implement NSW Health initiatives, such as the Safe Staffing Levels initiative. AONSW does acknowledge that NBH has achieved accreditation to ensure it meets national quality standards for hospital care — yet notes that some quality and safety concerns remain.

AONSW makes three recommendations in the report: first, that the state government and NSW Health note the report findings and that whether the NBH public–private partnership is the appropriate model to deliver the best-quality integrated health care in the Northern Beaches region is considered; second, that Healthscope resolve safety and quality, system, and reporting issues; and third, that NSW Health consider issues raised for this public–private partnership for any future arrangement.

Healthscope response

“The Audit Office report released today makes clear that the current public–private partnership at Northern Beaches Hospital is severely challenged,” Healthscope CEO Tino La Spina said on 17 April. “This is why Healthscope is offering to collaborate with the government for the early handback of the public hospital. I want to reiterate that patient care will be put first, and we are not seeking any windfall gain from this process.

“The report also confirms the strong day-to-day performance of our people at Northern Beaches Hospital in core areas of care, and I am incredibly proud of them. This has been further supported by NSW Health’s review of the Emergency Department, which has found it compliant against all eight criteria investigated. Our priority now is to ensure continuity of care for patients and stability for staff throughout this process.”

The report is available to read here, via the AONSW website.

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